IMO2020: What shipping companies have to do now to be compliant by 1 January

Beginning on 1 January 2020, all vessels worldwide will only be able to refuel using fuel with a maximum sulphur content of 0.5 percent – this is the requirement of the global fuel guideline known as IMO2020. As of 1 March, no vessel will be permitted to have on board any fuel with a high sulphur content. Only ships with exhaust gas cleaning systems will be excluded. In order to be compliant at the turn of the year and to consume their remaining heavy fuel oil in time, shipping companies are already having to make a number of preparations. This is both expensive and time-consuming.

The so-called IMO2020 regulation will entail a radical change for the entire shipping industry. Transitioning from fuel with a sulphur content of 3.5 percent to low-sulphur fuel oil will be a complex task. “It’s not about simply flipping a switch at the turn of the year, as every single ship will have to be closely examined to determine the best possible type of change depending on its design,” says Richard von Berlepsch, Managing Director Fleet Management at Hapag-Lloyd. “That’s why a large number of Hapag-Lloyd departments connected to fleet operations are currently working on this issue.”

The challenge is that heavy and low-sulphur fuel oil are not compatible in all cases. For example, if one simply refuelled with low-sulphur fuel oil, the two fuels could react with each other and, in the worst case, coagulate – i.e. solidify. Were this to happen, lines and filters would be clogged and the engine system would fail. Therefore, before switching fuel types, the tanks must be cleaned and the pipe systems flushed. However, in terms of time and – above all – money, it isn’t feasible to send every ship into dry dock for this purpose.

On the assumption that the spread between high-sulphur fuel oil (HSFO) and low-sulphur fuel oil (LSFO 0.5%) will be 250 US dollars per tonne by 2020, Hapag-Lloyd estimates its additional costs being around 1 billion US dollars in the first years.

The fact is that the on-board cleaning is extremely cost-intensive. Manual cleaning of the tanks may have to be carried out by external service providers. An alternative is cleaning with chemical additives, but that also carries some risks.

In any case, no matter what the method of cleaning is, the result for almost all ships is that their tanks will have to be run virtually empty. Doing so allows you to avoid keeping a residual amount of heavy fuel oil on board. But running tanks empty must also be carefully planned, as the transition from heavy to low-sulphur fuel oil depends on the tank and pipe system. While larger ships have several settling tanks, which allows you to switch from heavy to low-sulphur fuel oil on a set date, some ships only have one settling tank. Thus, with the latter, cleaning and bunkering have to be planned with particular precision.

To help the transition go smoothly, each vessel will receive a ship implementation plan (SIP). Hapag-Lloyd will also provide guidelines to the owners of its chartered vessels that will list the earliest possible date for conversion, fourth quarter schedules, and bunker ports for conversion, including possible alternatives and emergency ports. After all, it can sometimes happen that a ship has to sail faster to make up for a schedule delay – and therefore also consumes more fuel. As a result, the ship will not be able to stick to its planned timetable for switching from heavy to low-sulphur fuel oil. The same applies if a ship has to wait at anchor before entering a port, thereby causing a schedule delay. All these contingencies must be taken into meticulous account.

The plan is to supply all vessels with the new low-sulphur fuel oil in good time during the fourth quarter. The actual switch in terms of which fuel is used to operate the vessel should then take place as late in December as possible.

All these extensive measures are designed to keep additional costs to a minimum and to minimise possible schedule disruptions – so that customers’ goods can be delivered to their destination as planned.
Source:: Hapag-Lloyd